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| After three weeks of decreasing activity, applications finally reacted positively to favorable rates — which reached seven month lows because of the outlook for inflation.
The 30 year fixed rate mortgage averaged 5.58% this week — falling 8 basis points (BPS) from last week and standing at the lowest level since July 11, 2003, when the rate was 5.52%, according to Freddie Mac’s latest survey of 125 lending thrifts. A year ago, the average was 5.84%. Meanwhile, Freddie said the 15-year dropped 9 basis points to 4.87%, which nears July’s 4.85%. The one-year Treasury-indexed adjustable-rate mortgage (ARM) fell 4 BPS to 3.53%, reported the secondary lender. Meanwhile, the ARM share of total applications increased slightly from the previous week to 27.1% — about double the share a year ago — according to the Mortgage Bankers Association of America (MBA). “There continues to be no sign of inflation on the horizon and, as a matter of fact, core inflation is at a generational low,” said Freddie’s chief economist Frank Nothaft, in a written statement, indicating that rates will remain “teetering” among the low levels of last summer. In line with the economist’s comments, 73% of the mortgage industry experts surveyed by Bankrate.com this week, stuck to last week’s prediction that rates will remain unchanged (plus or minus 2 basis points) over the next month and a half. None of the panelists voted rates would increase, while the remaining 27% predicted a downturn. One of the surveyed experts pointed out that “the long-awaited job upsurge remains a bit in the future. So the bond markets may be content at current levels for awhile.” He further suggested that if any action is to occur within rates in the upcoming weeks it will be the “narrowing of the yield gap” between the long-term rate and the short-term rate — “primarily from a stable 30-year mortgage rate and rising short-term rate.” At the close of trading Thursday, the 10-year Treasury note had a yield of 4.03% and price of 99 23/32. A week ago, the note yield closed at 4.04% and the price at 101 18/32. As for mortgage application activity, MBAs Market Composite Index increased 4.9% from the previous week to 837.1, according to the Washington D.C.-based group’s latest Weekly Mortgage Market Applications Survey. Last year at this time, the index stood at 1082.8. According to the MBA, refinance activity was stronger purchase money — the Refinance Index rose 6.4% to 3298.3, while the Purchase Index rose only 2.9% to 413.9. Meanwhile, the refinance share of total mortgage applications at 56.6% was almost unchanged from the previous week. |
Coco Salazar is an assistant editor and staff writer for MortgageDaily.com.
email:Â s3celeste@aol.com
